Bitcoin Held Up Better Than Chip Stocks - Is It The Safer Trade Now?

Scott Melker (0:03)

Bitcoin flushed 800 million in longs, dropping down to almost $80,000 before bouncing right back up to where it was at the exact same time yesterday. But interestingly, a huge portion of the liquidated longs on crypto exchanges this time were actually tokenized SanDisk and not crypto tokens. We're going to talk about that and a lot more, of course, with Andrew and Tillman, but with a very, very special guest, Austin Campbell. Let's go.

Good morning, everybody. Happy Tuesday. Welcome to the Ozarks, which have lovely Sakura blossoms here today. It's a Japanese lake in the Midwest. I'm going to go ahead and bring on Austin Tillman and Andrew right now. Good morning, gentlemen.

Austin Campbell (1:02)

Good morning.

Scott Melker (1:04)

Andrew, as we discussed before the show, your beard now, I used to like it, but now I think it sucks.

SPEAKER_3 (1:10)

Yeah, it's been meaningfully eclipsed by this animal here.

Yeah, it's extraordinary. It's really strong work, Austin.

Scott Melker (1:20)

He has a great beard, and it's like consistent all the way around, well-framed. It's beautiful.

Austin Campbell (1:26)

I have the advantage of being a college professor, so now I can do whatever I want with my hair.

SPEAKER_4 (1:31)

It's a great look.

Scott Melker (1:32)

How many patches do you have in your jackets?

Austin Campbell (1:34)

Okay, so you're going to laugh, but when I started teaching at Columbia back in the day, one of my good friends deliberately gave me a jacket with leather elbow patches because he's like, you have to become the professor.

SPEAKER_3 (1:48)

I don't argue. Do you wear it?

Austin Campbell (1:51)

I wear it to teach because what could be funnier, Scott?

Scott Melker (1:55)

I knew you wore it. I knew it. All right, let's start at the beginning here. Bitcoin rebounds above 83,000. I mean, we're at the same price. But Bitcoin rebounds above 83,000, decoupling from tumbling Korean stocks. But now let's get into the more interesting story. Austin, you and I talked about this for a second before. Tokenized Sandisk bet saw more liquidations in XRP as Asia's chip route wipes out 800 million. So listen, we did have a liquidation event here on crypto, but only 180 million of it this time was Bitcoin. Now, if they did 100 million, you go down and actually you had 20 million of that was tokenized Sandisk, and you sort of made a joke. Be careful what you wish for, right? I mean, what do you think of this? It's going to get crazy out there.

Austin Campbell (2:42)

So, I guess I would say a couple of things about this. Number one, equities historically have not traded 24-7. So, we're definitely going to change the volatility profile of stocks when we move from, call it 930 to 4PM style trading, to, hey, we're going 24-7 globally in these markets. Liquidity gets thin, price movements get amplified. Whatever people thought about volatility and margin of safety, throw that out the window for these markets. So, be careful with leverage, be careful with stops because that's how you get liquidated. The second part is 24-7 trading changes sort of the shape of how things work. You would expect in 24-7 markets that retail is going to get liquidated significantly more often. And the reason is people have to sleep, right? Like at some point, it's 3AM for you, unless you're a night owl like me, you're probably out cold and when the market rips, it just rips. So whatever you had in there is in there and it's hard for you to adjust it.

It really is a different market paradigm when you think about how that works. And so for all the people who are like, let's bring tokenized stocks, let's bring equities, just be careful what you're doing to the market structure and volatility surface when you do that.

Scott Melker (4:01)

Yeah, I mean, it's coming no matter what, right? But I remember it's funny because I just say, welcome to the party, Richter, right? I mean, this is what we've been doing the whole time over here in crypto. You guys want to sleep? You sleep in the Hamptons instead of going golfing, you know, for the Wall Street guys. But I remember the days that, you know, 2016, 17, when I started, you know, I would buy Bitcoin on Gemini or Coinbase, and I would send it to Bitrex to send, to trade altcoins, but there were no OCO orders. There weren't even trailing stops or stop losses or anything.

So it was either like you had to close every position every day and restart it the next day, which nobody did, or you generally woke up to finding out you were really rich or really poor on any given day. The true rich dad, poor dad, poor dad, rich dad, whatever, right? I mean, every single day, you would wake up and be like, oh, this illiquid altcoin moved 74% while I was sleeping, and I lost everything because there was no stop loss. I mean, we've seen this movie actually for us in our little echo chamber many, many times.